City survivor can still take on the big boys

John Willcock discovers why one of the dwindling band of independents is such a success
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The Independent Online
John Hodson, chief executive of Singer & Friedlander, stands guard over that rarest of endangered species - an independent, British risk- taking merchant bank. This week it showed off its rude good health by announcing a 57 per cent leap in 1996 profits to pounds 54.80m.

Even stripping out the substantial one-off gain from the sale of Singer's stake in People's Phone, profits still rose 22 per cent, an increase that would have been the envy of Barclays de Zoete Wedd, the UK's premier contender in the investment banking stakes. So how does it do it?

What is most striking about the bank is the handful of interesting business personalities it has attracted. Four years ago, Singers provided Terry Smith, a former analyst with UBS, the Swiss-owned investment bank, with a refuge after he outraged his then employer with a now notorious expose of how companies allegedly cook their books, Accounting for Growth.

Nigel Wray's name has been even more closely associated with the group in recent years. The bank owes its current stock market quotation to the Midas-touched Mr Wray - still a non-executive director - after he merged certain property interests with Singer & Friedlander just ahead of the stock market crash in 1987.

One of the prime movers behind the Burford property group, he is now turning his attention to sport through involvement in the Saracens rugby club and a current bid to take over Nottingham Forest.

And once again it is Singer which appears to be providing the focus for Mr Wray's interests. In January, the bank launched a collective fund to invest in football clubs.

This venture has proved a magnet to yet another personality, Alan Hansen, the former Liverpool star and soccer commentator, who is acting as adviser to the fund.

As Mr Hodson explains, this is the key to Singer's identity: "We are a collection of people who bring things to the business. We don't sit around making grand strategic plans about which area to move into next."

People's Phone is a practical case in point. "Our group's investment was brought to the board by Nigel Wray, although he has no role in the day-to-day running of Singers," says Mr Hodson.

This attitude of pragmatic growth has brought a number of acquisitions, with the emphasis always on niche areas where the market is growing, and which are largely ignored by "the big boys", as Mr Hodson describes the likes of Goldman Sachs and Merrill Lynch.

So is he worried that overseas banks, desperate to get into London fund management, for example, may have their eye on his bank? "I don't get the flavour that people are stalking us.

"We want to get the massage over that we're not just an asset play - earnings are rising fast," he says. This growth enabled Singers to announce a 16 per cent increase in its total dividend for last year.

While no business dominates, most earnings from the managed businesses come from broking, even before taking account of the 45 per cent stake in Carnegie, the Swedish stockbroker owned by Singers.

The bank bought what Mr Hodson calls "the Swedish Cazenove" two years ago from Nordbanken, and with its 450 staff in the City's Chiswell Street, it is as big as Singers. Carnegie reported profits up 12.5 per cent to pounds 16.1m.

Now headed by Lars Bertmar, Carnegie was originally founded by David Carnegie, a Scot who emigrated to Goteborg on the Swedish west coast in the 18th Century, after backing Bonnie Prince Charlie.

Meanwhile, Singer's London-based broker, Collins Stewart, now houses the irascible Terry Smith. Collins is a specialist low-cost agency broker set up by Singer which also makes markets in smaller companies.

It sponsors floats on the Alternative Investment Market and is corporate broker to businesses like Westminster Health Care. Collins also had a good year, chipping in pounds 7.6m to profits. It was involved in 22 deals and raised more than pounds 300m for clients.

Singer's fund management operation has traditionally been led by private client business. Funds under management leapt 58 per cent to pounds 6bn last year, including funds which Singer took over from troubled Knight Williams in June 1995.

Tony Fraher, formerly of Morgan Grenfell, now manages the fund management arm, which was behind the January launch of the Football Fund.

Singers has not neglected old-fashioned merchant banking, recently poaching Charles Price from NM Rothschild to head up the division, something Mr Hodson regards as quite a coup.

So does he have any regrets? "I wish I'd invested in Burford - just like everyone else does," he replies. Burford is, of course, chaired by Nigel Wray. Apart from that, "as long as the markets remain active, we will continue to prosper".